Back green growth or we’ll cut investments, companies warn

This week international firms and energy companies including Mitsubishi Power Systems and Siemens have threatened to slash planned investments in the UK unless George Osborne, the UK Chancellor, shows real commitment to developing a low carbon economy and delivering green growth.

The Times reported that if these firms carry out their threats, hundreds of UK jobs are at risk.

In the same week a separate call came from more than 50 businesses including household brands like Microsoft, Asda, EDF and Sky for the UK government to put in place a 2030 target on decarbonising the power sector, saying that this would stimulate investment and revamp the UK’s ageing energy infrastructure.

In response to these messages, Osborne did say investing in renewables is important, but he immediately undermined this by announcing a new generous tax regime for shale gas extraction. Osborne also supports a new “dash for gas” which would involve building around 20 new gas-fired power stations, raising carbon emissions and diverting investments in renewable energy.

Connie Hedegaard, European Commissioner for climate change this week said that gas cannot be the whole solution to Europe’s energy dilemma. “It’s clear that with renewable energy you get a much more longer term and sustainable solution. That’s why we need CO2 targets and renewable targets,” she said.

While it is good to hear high-level decision makers like Hedegaard thinking of long-lasting energy solutions that consider the future of our planet and spur green growth, concrete policy decisions also need to be taken now. National governments including the UK need to create a stable investment environment for renewables to allow companies like Siemens and Mitsubishi Power Systems to continue to invest in the UK.

At the EU level, a 2030 target for renewable energy would help provide governments and investors alike with the long-term vision for bringing vast amounts of renewable energy online, transforming the way Europe’s electricity is generated today. Looking to the long-term it is hard to see why some decision-makers do not favour a renewable energy revolution that would slash carbon emissions, bring down energy costs – in renewable energy the upfront capital costs are higher than fossil fuels but once they are up and running the fuel is free – and create thousands of jobs in the process.

On a brighter note, some European countries have recently made decisions that will help to attract investments in renewables. Jyri Häkämies, Finnish energy minister, last week announced that Finland plans to phase out coal-fired power stations by 2025, and will invest heavily in renewables. Meanwhile Norway announced on Monday that it will almost double carbon taxes on the oil industry in 2013.